Closed-ended fund arbitrageur Carrousel Capital has gone after three investment trusts, denying them...
Closed-ended fund arbitrageur Carrousel Capital has gone after three investment trusts, denying them share buy-back powers by voting against the boards at recent annual general meetings.
Charles Cade, investment trust analyst at Close Wins, said the action represented a new tactic from arbitrageurs designed to prevent share capital of the trusts falling into friendly hands, without opportunists first having the chance to pick up the stock.
"This tactic potentially makes it easier to acquire stock as they become the only buyer of last resort," Cade said.
The motivation of Carrousel is clear to see, according to fund of investment trusts manager Nick Greenwood of Iimia. He said: "When a trust is not performing and there is some loose stock in the market, managers want to get it into friendly hands quickly and stop it reaching arbitrageurs, and share buy-back powers are a way to achieve that. If arbitrageurs think that is what is happening they will seek to prevent it."
Carrousel is perhaps best known for its wind-up attack on Henderson Global Investors' Absolute Return Portfolio fund of hedge funds, managed by John Husselbee.
Three trusts affected
• Edinburgh UK Smaller Companies Tracker
• JPMF Continental European
• F&C Smaller Companies
'Truly making a difference'
Avoidance, evasion and non-compliance
From 6 April 2019
Marcus Brookes appointed CIO